Feedback: The Mortgage Mess & What It Means For You

In October 2006, U.S. Senator Chuck Schumer (D. - NY) came to Watertown to announce $3 million in new housing programs funded by Freddie Mac and Fannie Mae.

It offered first-time home buyer counseling and special no-money-down mortgage deals.

But some people, like Gary Beasley of Neighbors of Watertown knew these great deals weren’t as great as they sounded.

“We ended up counseling people not to participate in the other programs,” said Beasley.

In fact, loan programs like the one announced almost two years ago are the reason we’re in a mortgage crisis today.

Fannie Mae and Freddie Mac are taking a beating for investing in and promoting high risk mortgage loans - loans that promised a lot of money for not a lot of payment.

It enticed people to borrow.

“A naive buyer, buying a home for the first time, if they’re not counseled properly, could have fallen into that trap so innocently,” said real estate broker Nancy D. Storino.

When you think of the mortgage crisis, think of your credit card.

Sure you may have a high spending limit, but it doesn’t mean you should go on a spending spree.

For years banks have been allowing people to rack up more debt than they can handle and now everyone will have to pay for it.

“If the banks have to take ownership in this, I think that the investor certainly has to jump into the ownership pile with us. The borrowers themselves have to take ownership for the financial choices that they made,” said Patrick Wolf of Countrywide Bank.

President Bush is urging Congress to pass a bill that would spend billions and billions of dollars in taxpayer money to bail out Fannie and Freddy.

Locally, if you’re looking to buy a home, getting a loan will be tougher.

“Now obviously you’re going to have to prove that income is what you say it is,” said Gary Beasley.

The Fannie and Freddie fiasco may also hurt development.

Fannie Mae has pulled out of the investment market in an effort to fix the mortgage crisis.

The was going toward things like housing projects.

Now it’s gone and in all likelihood people will pay for that gap in one way or another through taxes or even higher rent in some cases.

Most experts say Fannie and Freddie will rebound, but it’s going to cost all of us in time and especially in money.

See Jeff Nelson’s report:

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